Taiwan Semiconductor Sees Significant AI Market Growth in 2025, Stock Price Expected to Rise
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 23 2025
0mins
Should l Buy TSM?
Source: Fool
- Market Leadership: Taiwan Semiconductor holds a 34% share in the semiconductor foundry market and is responsible for approximately 85% of startup product prototypes, ensuring its core position in the AI supply chain and attracting significant investor interest.
- Revenue Growth: In Q3, high-performance computing, including AI products, accounted for 57% of total revenue, with a year-over-year increase of 40.8%, demonstrating strong market demand and ongoing business expansion potential.
- Strategic Investment: The company is investing $165 billion in Arizona to establish new manufacturing facilities, which not only enhances production capacity but also effectively mitigates tariff challenges in the U.S. market, laying a solid foundation for future growth.
- Diversified Client Base: Collaborating with 500 companies allows Taiwan Semiconductor's products to power 12,000 different technologies, and while AI business is rapidly growing, its diversified presence in smartphones and IoT provides stable revenue streams.
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Analyst Views on TSM
Wall Street analysts forecast TSM stock price to fall
8 Analyst Rating
7 Buy
1 Hold
0 Sell
Strong Buy
Current: 360.390
Low
63.24
Averages
313.46
High
390.00
Current: 360.390
Low
63.24
Averages
313.46
High
390.00
About TSM
Taiwan Semiconductor Manufacturing Co Ltd is a Taiwan-based integrated circuit foundry service provider. The Company is primarily engaged in integrated circuit manufacturing services. It offers advanced process technologies, specialised process solutions, advanced photomask and silicon stacking, and packaging-related technologies, while supporting a comprehensive design ecosystem. The Company's products serve diverse electronic sectors including artificial intelligence, high-performance computing, wired and wireless communications, automotive and industrial equipment, personal computing, information applications, consumer electronics, smart internet of things, and wearable devices.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Market Growth Potential: TSMC projects a 25% CAGR through 2029, implying revenue could approach $237 billion, and if current margins are maintained, annual EPS could rise to $20.61, indicating robust profitability and market demand.
- Price Forecast: With a forward P/E of 26.4, the expected share price by 2029 is $543, representing a 48% increase from current levels, which would elevate market capitalization to over $2.8 trillion, reflecting optimistic market expectations for future growth.
- Industry Leadership: As the world's leading foundry, TSMC produces over 10,000 products annually, with a 48% growth rate in high-performance computing chips projected for 2025, underscoring its critical role in the AI and other high-demand markets.
- Investment Value: TSMC's unique position as a major manufacturer of smartphone and automotive chips, coupled with its pivotal role in the AI market, makes it an ideal investment choice, with expectations to surpass a $3 trillion market cap before 2030, positioning it as one of the most attractive investments today.
See More
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- Strong Market Demand: Despite market hopes for a slowdown in AI spending, this trend is expected to persist for several years, particularly as the construction of large data centers takes time, indicating a bullish outlook for companies involved in AI.
- Nvidia's Leading Position: Nvidia (NVDA) has emerged as the top provider of AI computing units since 2023, with its latest Rubin chip architecture requiring four times fewer GPUs for training AI models, further driving customer upgrade demand, and is projected to grow at 65% in fiscal year 2027.
- TSMC's Growth Potential: Taiwan Semiconductor Manufacturing (TSM), as the world's largest chip foundry, is expected to see nearly 30% revenue growth this year, benefiting from the four major hyperscalers planning to invest around $650 billion in capital expenditures, highlighting its crucial role in AI spending.
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See More
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- Nvidia's Continued Dominance: Nvidia's launch of the Rubin chip architecture reduces the number of GPUs needed to train AI models by four times, with analysts projecting a 65% growth rate for fiscal year 2027, indicating strong market demand and ongoing technological innovation.
- Taiwan Semiconductor's Significant Gains: As the world's largest chip foundry, Taiwan Semiconductor is expected to see nearly 30% revenue growth this year, benefiting from the $650 billion capital expenditures planned by the four major hyperscalers, positioning it as a neutral beneficiary of AI spending growth.
- Broadcom's Rise: Demand for Broadcom's custom AI chips is surging, with projected revenue from AI chips expected to double in the upcoming quarter, providing a cost-effective alternative to Nvidia and demonstrating its competitive edge in the AI computing landscape.
- Microsoft vs. Alphabet: Microsoft's price-to-earnings ratio has dropped to 24 times, making it an attractive low-cost stock for investors, while Alphabet has rebounded with its Gemini model and rapidly growing cloud platform, showcasing strong prospects in the generative AI space.
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- Nasdaq Outperformance: The stock market rose last week, with the Nasdaq leading the way, indicating a strong rebound in tech stocks that may present new investment opportunities for investors.
- Investor Focus: As Nvidia's earnings report approaches, market sentiment is buoyant, with investors hoping for results that exceed expectations, potentially driving further gains in tech stocks.
- Geopolitical Risks: Recent developments between the U.S. and Iran could impact market sentiment, prompting investors to tread carefully in anticipation of potential volatility, especially ahead of key earnings releases.
See More
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- Taiwan Semiconductor's Market Position: Taiwan Semiconductor (TSM), as a primary chip manufacturer, is expected to grow nearly 30% in 2026, reflecting strong confidence in chip demand; despite its current price nearing all-time highs, it remains an essential part of any investment portfolio.
- Nvidia's Growth Potential: Nvidia (NVDA) continues to see robust demand for its GPUs in AI data centers, with a projected 65% revenue growth for fiscal year 2027; although its stock is down nearly 10% from its all-time high, this presents a rare buying opportunity for investors.
- Broadcom's Market Strategy: Broadcom (AVGO) is designing specialized chips for specific workloads, with analysts forecasting a 51% revenue growth in 2026; despite its stock being down nearly 20% from its peak, its unique market strategy positions it advantageously in the competitive landscape.
- Microsoft and Amazon's Slump: Both Microsoft (MSFT) and Amazon (AMZN) have seen their stocks drop 25% and 20% respectively due to disappointing earnings reports, yet their solid fundamentals suggest that the current undervaluation offers a great buying opportunity for investors.
See More
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- New Acquisitions: The firm invested in shares of a trending streaming provider during the same period.
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